What Was The COALGATE Scam: We Demystified It For You

The coal allocation scam, or ‘Coalgate’, is a hugely unpopular political scandal that engulfed the UPA government in it’s recently concluded tenure. The scam gained attention after the Comptroller and Auditor General of India (CAG) found the government to be accused of allocating 194 coal blocks to public and private enterprises for captive use in a flawed manner between 2004 and 2009.

Coal reservoir of an old steam locomotive

HISTORY

A huge percentage of India’s electricity is produced by coal-based thermal power plants.

Coal was nationalized in India and Coal India Ltd was given sole rights to extract coal. However, it has failed to supply required quantities of coal by various sectors in the nation.

In 2004, UPA decided that since Coal India was incapable of producing sufficient coal, thus a certain quantity of coal blocks shall be allocated to private companies.

The basis of the scandal was that the government suffered a huge loss and private companies enjoyed windfall gains because the government’s policy of allocating coal blocks was allegedly unclear and non-transparent.

The government did not introduce the process of competitive bidding. It also came to light that many politicians lobbied for allotment to certain private players raising question marks over crony capitalism. The coal blocks were allotted arbitrarily instead of through a fair and square manner of bidding.

The CAG also alleged that private entities got more coal blocks than needed for their operations and several companies sold coal meant for self-use in the open market which was against the rules.

DEFENCE OF THE GOVERNMENT

The government in its defense said that the delay in introducing the auction process was due to a coalition government. It also mentioned that opposition states opposed the auction process. Moreover, an auction can lead to higher prices hurting consumers which would never be its objective.

Former Coal Secretary P C Parakh informed the CBI that the PM overruled his call for auctions and continued arbitrary allotments of blocks.

THE AMBIGUITY

As many as 157 files which are of utmost importance for the CBI have gone missing including those containing information of allocation records, etc.

LOSS TO THE NATION

The final report by the CAG put the loss at around Rs. 1.86 lakh crore to the government.

The coal scam is a blot in our history and one can only hope and pray that the culprits are caught and such kind of daylight burglary isn’t repeated again.